Got milk? If you don't, it might cost you more the next time you visit your favorite grocery store – a lot more, perhaps an increase of 47 cents a gallon.
That's how much more Northern California dairy owners will get beginning on Saturday when the farm price of a gallon of whole milk increases from $1.36 to $1.83, a record high. At the same time, the price of milk in other parts of the nation will rise 50 cents. The minimum farm price for a gallon of whole milk is being set a $1.69 by the Department of Agriculture.
The price increase is expected to reach beyond the milk carton. It will affect the cost of ice cream and cheese as well as food items with dairy products, such as pizzas, cheeseburgers, bakery goods and frozen meals.
Consumers will take a hit in the wallet, but a very important segment of our local agribusiness – milk producers – would say it's about time after five years of devalued prices. During those years, 2002 and most of 2003 saw dollar-a-gallon prices – below the dairymen's cost of production.
When the farm price of milk hit rock bottom – the lowest in a quarter century – farmers decreased their herds through slaughtering or cut back on milking the cows they kept. In yet another way to take milk out of the domestic market, some dairymen sent it to cheese factories for overseas export. Meanwhile, a drought in Australia has lowered production there and tightened global milk supplies.
California dairymen can expect to gain $3 a day in income from each cow in their herd, a dairy consultant estimates. That is, if they are still in business.
The milk price crash of two years ago forced far too many dairymen to close their barn doors for good. The value of milk produced in San Joaquin County in 2002 dropped 20 percent yet it remained the No. 1 crop, valued at $237.4 million.
Many of us will be displeased to pay the higher price for milk and other food products, but most of the extra cash will return to our community seven-fold through investments by dairymen in capital equipment, goods and services.